Am I missing something or over thinking?

[Jeremy Helsabeck]

I’ve been looking for properties to invest in that meet the flowing critters and I keep falling just short. I’m trying to follow The things I’ve heard Brandon Turner reference.

-1% rule or greater

-Cap rate of 10% or greater

-cash flow of $200/mo+

I’m finding multiple properties that are 1%+ and cash flowing at $200/mo+

But I can’t find the cap rate of 10%+ at the same time, unless I’m looking at class C properties, which I’ve been advised not to consider at first and that I should stick with B class properties. (Yes, I know that’s subjective)

What am I missing or doing wrong here?

[John Warren]

@Jeremy Helsabeck 10% cap is very unrealistic in this part of the market cycle. In many ways, the cap rate is influenced by interest rates. If you can borrow money at 4% and buy a 10 cap, you are essentially getting to enjoy a 6% return on the banks money with little effort! If this sounds too good to be true, that is because it is too good to be true! Buildings in solid B class areas where I invest and work like Berwyn or Forest Park are being sold in the 6-7 cap range currently (or even lower in some cases). This means that the arbitrage between interest rate and cap rate is only 3% or so. 

10 cap in today's market probably means you are in a war zone. If you see $200 per door of cash flow in a good area, snap it up!